Rats And Housing Markets Don’t Care What You Think

Just when the pizza rat skips town, another takes the subway and got off at 42nd Street. This is why I love New York! Every day is an adventure!

 

But I digress…

Brick Underground Podcast Interview: The Market Doesn’t Care What You Think

That was the theme but my interview episode was called “the state of the market.“

The indispensable NYC web site Brick Underground has been doubling down on its podcast as of late and I was fortunate enough to be invited to speak about the state of the market.

It was fun and hopefully, I conveyed some helpful insights to their listeners. You can subscribe to the Brick Underground Podcast feed here.

And specifically my interview here.


Aspirational Pricing: A Record Number of Manhattan Records in 2019

Kind of.

Wall Street Journal Mansion Section reporter Kathy Clarke broke all three of these record price stories.

$238 million, $80 million, $80 million

Here’s how it played out.

January 2019: Highest purchase price in North America (220 Central Park West $238 million) but went to contract in 2015 so it was not a recent “meeting of the minds” and sparked the ill-conceived “pied-a-tax” proposal which was killed in Albany and replaced by the new Mansion Tax. June 2019: Highest priced townhouse in New York City History (14-16 East 67th Street $80 million (est)). It was a pocket listing. The seller said the square footage was expanded to 30,000 up from its 13,300 square feet from the prior sale. I inspected this property a few times before Falcone acquired it and based on the new photos, this property was gut renovated through and through. June 2019: Jeff Bezos reappeared after rumors swirled about Amazon expanding their footprint in NYC despite the blow-up of their deal with NYC in Long Island City. He purchased a 3 unit condo in a new conversion (212 Fifth Avenue $80,000,000±). The penthouse itself hasn’t been recorded so the exact total price hasn’t been confirmed.

What does this mean? Is this a comeback for the super luxury market?

Nah. But it does somewhat suggest that buyers for high-end Manhattan property are circling the wagons waiting until the seller gets real.

All these building photos came from the WSJ articles announcing the records.

  • The Griffin purchase reflects the market of four years ago when it went to contract [Source: Wall Street Journal]
  • The Falcone sale wasn’t openly marketed and therefore vetted since it was a whisper listing [Source: Wall Street Journal]
  • The Bezos purchase reflected a 21% drop from the original ask but that’s only to the last asking price. The definitive contract price is not recorded yet but it represents at least a 21% discount from the original ask. [Source: Wall Street Journal]

As far as high-end real estate goes, it looks like the highest levels of the Manhattan luxury market are comprised of sellers willing to accept offers at market value. As I mentioned in the Brick Underground Podcast above:

The Market Doesn’t Care What You Think

 

“The Plaza” by Julie Satow is a Great Read!

“Trust” is Hard To Win Back

Trust is a wildly important asset to have in the banking industry. They violated the public trust during the housing bubble and have worked hard but still haven’t reach pre-bubble trust levels. Let this be a lesson to Appraisal Management Companies, Mortgage Lenders, GSEs and Regulators who are currently working hard to undermine consumer trust again through the mortgage valuation process in order to generate more volume.

Here’s yet another amazing infographic from Visual Capitalist infographic:

Getting Graphic

Our favorite charts of the week of our own making

Len Kiefer‘s Chart Handiwork

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

House Panel: What’s Your Home Worth? A Review of the Appraisal Industry

Phil Crawford of Voice of Appraisal sent a “call to action” email to his followers early this week to recommend I provide testimony on this upcoming June 20th panel. As a result, there were hundreds of recommendations sent to the House Financial Services Committee providing why I would be a good candidate to speak on the panel. I was blown away by the support and the professionalism of the emails. I thank you all.

The committee told me yesterday that I would not be on the panel but offered other ways to share our views and I was very appreciative of the opportunities offered to me. Today I was told by someone outside of the committee that these were the names of the panelists. Four were chosen by Democrats and one was chosen by a Republican.

Jennifer Wagner (Mt State Justice) Jeff Dickstein (REVVA) Andre Perry (Brookings Institute) Stephen Wagner (AI) Dave Bunton (TAF)

My only concern with the information to be discussed is that the appraisal industry sees the re-introduction of checks and balances to the appraisal process, that the consumer and public trust is protected and a stabilized housing market is promoted.

I have the gravest of concerns for the inclusion of The Appraisal Institute who haven’t been relevant in the residential mortgage appraisal community for at least a decade. My other grave concern is the inclusion of REVAA which is the trade group of appraisal management companies that control 80% of residential mortgage appraisals and are the single reason for higher consumer appraisal costs and reduced quality.

Still, I will keep an open mind and believe me, appraisers across the country will be watching this hearing very closely.

The November 2016 House hearing on this same topic was largely a misrepresentation by the Appraisal Institute on the state of the industry.

However, I have full confidence that Chairperson and Congresswoman Maxine Waters and her legislative colleagues and staff will see the challenges very clearly.

Let’s Focus on the Public Trust

If you missed it – take a look at a banking industry trust visual I presented earlier in these Housing Notes:

“Trust” is Hard To Win Back

Banking still hasn’t recovered from the financial crisis using this metric. History is repeating itself right now with the “modernization” movement – code word for “automated valuation” using abysmally unreliable technology.

OFT (One Final Thought)

Ladybugs are on our radar.

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll not care what the market thinks;
  • You’ll not care what they think;
  • And I’ll care what the market thinks.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC President/CEO Miller Samuel Inc. Real Estate Appraisers & Consultants Matrix Blog @jonathanmiller

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